Google to Buy Minivans for Self-Driving Tests from Fiat Chrysler

Alphabet Inc's Google (NASDAQ:GOOGL) unit has agreed to buy about 100 plug-in hybrid minivans from Fiat Chrysler Automobiles NV to expand its self-driving vehicle testing program, the two companies said on Tuesday -- in the most advanced partnership to date between Silicon Valley and a carmaker.

The vehicles will not be offered for sale to the public. Unlike prior testing in which Google bought Toyota Motor Corp <7203.T> vehicles from dealers and retrofitted them, the search engine giant will work with FCA directly on the test models.

Under the agreement, FCA will equip around 100 of the Chrysler Pacifica minivans it launched in February with Google's self-driving technology. The deal does not preclude either FCA or Google from cooperating with others, the companies said in a statement.

The deal marks the first time that Google has worked directly with an automaker "to integrate its self-driving system, including its sensors and software, into a passenger vehicle," the statement said.

The additional vehicles will more than double Google's testing fleet. Google is now testing self-driving vehicles in four U.S. cities.

Fiat Chrysler "will initially design and engineer around 100 vehicles uniquely built for Google’s self-driving technology. Google will integrate the suite of sensors and computers that the vehicles will rely on to navigate roads autonomously," the statement said.

The firms will co-locate part of their engineering teams at a facility in southeastern Michigan to accelerate the design, testing and manufacturing of the vehicles.

“FCA has a nimble and experienced engineering team and the Chrysler Pacifica Hybrid minivan is well-suited for Google’s self-driving technology,” said John Krafcik, chief executive of the Google Self-Driving Car Project.

"Working with Google provides an opportunity for FCA to partner with one of the world’s leading technology companies to accelerate the pace of innovation in the automotive industry," Fiat Chrysler Chief Executive Sergio Marchionne said in a statement. "The experience both companies gain will be fundamental to delivering automotive technology solutions that ultimately have far-reaching consumer benefits.”

FCA is lagging rivals in technology development and with a net debt pile of 6.6 billion euros lacks the cash to invest. Google has said that it does not want to build self-driving vehicles on its own and has explored alliances with auto companies, but none have been finalized. Executives at other automakers, including Ford Motor <F.N>, General Motors <GM.N> and Daimler <DAIGn.DE>, have expressed wariness about alliances with Alphabet or other technology companies that could relegate them to the role of hardware suppliers. Marchionne has long argued that a huge amount of capital is wasted by carmakers developing the same technology and tie-ups among the big players were needed to boost profitability.

The self-driving Chrysler Pacifica hybrid minivans will be tested by Google’s self-driving car team on its private test track in California prior to operating on public roads.

(Reporting by David Shepardson in Washington and Bernie Woodall in Detroit; Editing by Tom Brown)